Waterloo sunrise (with patchy cloud): the railway and the Retained EU Law (Revocation & Reform) Act 2023

28 September 2023

Earlier this year in our insight "Waterloo sunset" – which you can find here – we spoke about government proposals to scrap all "retained European law" which forms part of our domestic law following Brexit. As the plans stood at the time, all retained European law would be automatically abolished – unless specifically saved – at the end of this year.

This had huge implications for the railway. So much of the law underpinning railway operations, licensing, access and safety has European origins. Automatic abolition risked huge gaps and legal uncertainty for everyone working in rail. We commented that "Preserving the status quo… would seem to be the better option, but is not the current plan." Instead, we suggested a more rigorous approach to reviewing existing provisions: considering whether it could be revoked, retained "as is" or retained with amendments.

Other industries had similar views on the proposed "sunsetting" and with the prospect of defeat in Parliament, the government relented. Instead, a finite list of retained EU law would be removed in December 2023 and government departments would be given broad powers to review and revise the EU law that remained to ensure it was fit-for-purpose in the post-Brexit world. For the railway in Great Britain, this means the Department for Transport (DfT) and, where applicable, the Scottish Ministers and Welsh Ministers. This approach is set out in the Retained EU Law (Revocation and Reform) Act 2023 (the EU Law Reform Act) which became law on 29 June 2023.

New approach and implications for rail

The approach reflected in the EU Law Reform Act has a number of key changes:

A small number of railway-specific laws will be completely revoked. These are a tiny percentage of the 587 laws across all industries that are still expected to "sunset" at the end of 2023. For the railway, these laws are now largely redundant following Brexit – for example, relating to the EU Agency for Railways which the UK no longer participates in. Indeed, in a letter to the Prime Minister, dated 15 May 2023, Sir Bill Cash MP, Chair of the House of Commons European Scrutiny Committee stated: "… almost without exception, the REUL detailed in the Schedule relates to matters that are trivial, obsolete and are not legally and/or politically important.". The railway law being revoked falls within this category.
Using the powers under the EU Law Reform Act, the DfT has decided to revoke a number of rail-specific "Commission Implementing Regulations" which set out in more detail how particular laws must be implemented. The Office of Rail and Road (ORR) has recently launched a consultation on amendments to various pieces of its existing industry guidance that are impacted by these legal changes. The consultation closes on 6 October 2023. The revised ORR guidance will take effect at the point the relevant laws are revoked. The revocations cover:
- Access to services facilities for rolling stock: The ORR believes existing laws and industry processes cover access to these types of facility. The ORR has also indicated that it will still expect operators of service facilities to provide information about the offerings at those facilities and the relevant access arrangements.
- Processes for undertaking the "economic equilibrium test": This was a test used to determine whether new open access operators should be granted access to the railway network where there is an existing publicly-funded operation under a Public Service Contract. In the UK, the test only applied between February 2019 and December 2020 and in any event the ORR has its own separate "not primarily abstractive" test for determining access applications.
- Criteria that can be required from operators seeking network access: This set out what an infrastructure manager could require operators to provide – such as financial guarantees and certain levels of capability – as a condition of access being granted. The ORR believes this is largely already covered by existing industry access processes under the Railways Act 1993 and the Railways (Access, Management and Licensing of Railway Undertakings) Regulations 2016 (the 2016 Regulations).
- Procedures and criteria for track access contracts: This includes more detail on the process for entering into a track access contract and translating access rights into a timetable. It also requires the infrastructure manager to publish a statement setting out available infrastructure capacity. As well as the legislation described above, the ORR considers there are existing industry arrangements, such as in the Network Code, that already achieve this aim.

Key pieces of legislation remain in place unaffected for now, such as the Railways and Other Guided Transport Systems (Safety) Regulations, often known as "ROGS" – relating to safety, and the 2016 Regulations on open access, charging and capacity allocation. However, we understand plans are afoot to make a small number of changes to the 2016 Regulations to facilitate the creation of Great British Railways (GBR) and implementation of the Plan for Rail. This is quite interesting as the existing law has already created some hurdles to industry reform:
- "Schedule 8" performance regime: In its consultation documentation issued as part of the Control Period 7 Periodic Review process, the ORR highlights the legal requirement for a track access performance regime. One of the proposals of the Plan for Rail was to stop – or reduce – an industry "money go round" where future GBR operators would receive compensation from GBR for train delays, simply then to have to pay that compensation back to GBR as the authority responsible for procuring the services. The picture is not quite as simple as the headline suggests – some form of schedule 8 would still be needed for non-GBR operators and wherever a GBR operator took a degree of revenue risk. In its conclusions document – which you can find here – the ORR proposes an optional "switch off" mechanism for Schedule 8 for GBR operators that could be triggered if circumstances permitted, including the necessary change to the law, sufficient rail reform developments and no reduction in protection offered to non-GBR operators. Only time will tell whether there will be sufficient progress to facilitate Schedule 8 being switched off.
- Informed Traveller changes: In deciding not to progress changes to Network Rail's licence to permit Network Rail to finalise the railway timetable 8 weeks out – currently 12 weeks – the ORR notes the "Better Timetables for Passengers and Freight" industry programme. This programme would, in the ORR's words (see here), "change the timescales for timetable production". According to draft documents published on Network Rail's website here, this would have introduced a third timetabling opportunity each year. It is difficult to see how these proposals reconciled with existing legal requirements on the number and timings for the timetabling process – and the consultation responses were largely against the proposal as well. The legal barrier is one the ORR expressly mentions in deciding not to go ahead with this change.

There are changes to the terminology you might hear, and certain general principles are being revoked in the UK. Retained EU law will become known as "assimilated law". Similarly, decisions of the European Court of Justice, formerly known as "retained EU case law", become known as "assimilated EU case law". Rights, obligations and liabilities which were directly effective in the UK without the government taking implementing steps will also be revoked with effect from the end of 2023, although the government has not yet set out a specific list of what these are. So there is a bit of "wait and see" here to understand the full implications.
In place of the "sunsetting" proposal, the government gives itself broad powers to revoke, amend or replace other retained or assimilated laws by way of statutory instruments passed by government ministers. The proposed process was heavily criticised during the Bill's passage through Parliament on the grounds that it did not allow sufficient parliamentary scrutiny but the government proposals prevailed. The broad powers extend to devolved authorities to the extent those laws fall within the competence of the Scottish Ministers or Welsh Ministers. Readers will be aware that the Scottish Ministers are responsible for certain rail-related functions through Transport Scotland and the same applies to the Welsh Ministers through Transport for Wales. These broad powers last until 23 June 2026 – the 10^th anniversary of the Brexit referendum – and allow for the development of purely domestic law. This means that the railway legal framework in Great Britain is likely to become increasingly different to its European counterpart.
In delivering a key governmental pledge, the EU Law Reform Act removes the principle of supremacy of EU law over domestic law. The latter expressly prevails – unless an international obligation requires otherwise – and provisions are included to encourage appeal courts to depart more readily from pre-Brexit judgments of the European Court. There is also the option for courts to make an incompatibility order where there is a conflict between retained or assimilated law and domestic legislation.

What does all of this mean in practice for the railway?

There has been no policy statement from the government explaining how it intends to use these powers. Whilst on the face of it there is a keenness to move away from the European approach, in the context of the railway the reality seems more to be that these powers won't simply be used for the sake of it; only where there is good reason to do so. Of course, government policy can change, particularly as existing legislation is reviewed by the DfT, Scottish Ministers and Welsh Ministers. Our view though is that we should not expect radical reform in the short term, but we will see incremental change. The pace of reform may well increase as we move closer to expiry of these new powers in mid-2026.
Key pieces of railway legislation with their origins in European law that – until now – had been left untouched could be revoked, amended or replaced by the government using these new broad powers. And this goes beyond simply a European perspective. These powers could also be used to make amendments to lower some of the legal hurdles to implementing the Plan for Rail.
What railway laws could fall within the scope of these powers? Whilst it was not a straightforward task, as there was no consolidated list of retained/assimilated laws, a dashboard has been published and is kept updated. The dashboard can be found here. It includes laws covering railway safety, access to the railway, licensing, awarding railway operational contracts, rail passengers' rights and obligations and train driver licensing. All of the topics mentioned in our original Waterloo Sunset piece are listed on this dashboard as part of a list of over 4,800 pieces of law.

So what do we need to do?

Unfortunately, the story isn't yet over. The good news is that the "sunsetting" of all retained EU law has been scrapped, so the gaps in the law we were concerned about at the start of this year will not happen at the end of 2023. However, railway businesses will need to keep a watching brief of what the DfT, Scottish Ministers and Welsh Ministers plan to do with their broad powers. The operation of the railway is underpinned by a foundation of law with its origins in Europe – and there is now opportunity to make it work for the future GB railway. So whilst the sun was setting at the start of the year, it is now rising, but that Waterloo sunset does still have some patchy cloud and chances of scattered showers.